Friday, September 30, 2016

This document is updated weekly, but why is it important? Healthcare marketers are aggressively pursuing new revenue streams to augment lower reimbursements provided under PPACA. Prescription drugs, particularly specialty, are key drivers in the growth strategies of PBMs, TPAs and MCOs pursuant to health care reform. The costs shared below are what the pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to "reference pricing." Apply this knowledge to hold PBMs accountable and lower plan expenditures for stakeholders.

Wednesday, September 28, 2016

Can payers save money on increasingly expensive prescriptions by setting prices based not on drugmakers' wishes, but on how well the medicines control, contain or cure disease?

The notion of tying drug payments to results, called "pay-for-performance pricing" or "value-based pricing," already is being tested by some health insurance companies, some pharmaceutical companies and Medicare. And just last week, the Oregon Health & Science University announced it will undertake a large-scale research project to examine how states could apply the concept to Medicaid.

Tyrone's comment:If all the savings are passed-back then great! But, value-based pricing is rife with hidden cash flow opportunities for non-fiduciary pharmacy benefit managers. Traditional or non-fiduciary PBMs are aware of the attention being paid to existing pricing arrangements or overpayments (see ESI, Anthem dispute) so this new pricing arrangement could serve a dual purpose; to show an effort to control costs AND protect their margins. Put another way, pay-for-performance arrangements provide an opportunity for non-fiduciary PBMs to protect margins while giving the "appearance" of reducing drug costs. How will a payer know when a drug has failed and just as important what happens to the revenue when a manufacturer credits it, for example? Remember this, better doesn't necessarily mean good. The concept is both brilliant and misleading so close the loopholes!

If payers are able to adopt a workable performance- or value-based pricing system on drugs, they may be able to hold down spiraling Medicaid spending, said Matt Salo, executive director of the National Association of Medicaid Directors.

Medicaid, the federal-state health insurance plan for the poor, is staggering under escalating prescription drug prices just as patients and private insurers are, and the costs are straining state budgets. On average, roughly a quarter of a state's budget goes to Medicaid spending.

Medicaid spending on prescription drugs for Medicaid recipients rose 24.3 percent between 2013 and 2014, in part owing to an increase in enrollment under the Affordable Care Act. That was nearly double the increase in total U.S. prescription drug spending in that same period, according to federal data.

And there's every reason to think the increase in spending will continue as drugmakers prepare to introduce dozens more "specialty drugs," high-priced, complex medications developed from living cells to treat chronic conditions such as hepatitis C, HIV, cancer, rheumatoid arthritis and multiple sclerosis.

Although they barely existed a decade ago, last year specialty drugs accounted for nearly a third of Medicaid spending, or about $16.9 billion. Specialty drugs make up just 1.5 percent of claims, but they could play a big role in the rise of Medicaid spending on drugs.

Something has to give, said Jeff Myers, CEO of Medicaid Health Plans of America, the trade association representing Medicaid managed care plans. "A system in which the manufacturers are pricing to get the most money out of taxpayers isn't workable," he said.

Pay-for-Performance
Currently, Medicaid and federal health plans such as Medicare and the U.S. Department of Veterans Affairs are constrained in bargaining with manufacturers over drug prices.

Pharmaceutical companies enter into agreements with the federal Centers for Medicare and Medicaid Services on what drugs all state Medicaid programs will make available to patients. In return, the pharmaceutical companies agree to give the states fixed discounts off their average price.

But those prices are set by the manufacturers, and the manufacturers are not governed by any price ceilings, nor are the prices based on the drugs' success, such as whether they control or cure a patient's disease.

Pay-for-performance or value-based pricing would change that. It would tie payments for prescription drugs to their effectiveness, whether they did what they were designed to do.
How well do medications for high blood pressure or cholesterol, for example, keep patients in healthy ranges for each? How well do medications control symptoms of autoimmune diseases? How much do cancer drugs extend life? And how much do the drugs save the health care system by enabling patients to avoid medical treatments they no longer need?

How to Price
Evaluating the effectiveness of a drug will be essential to pricing under the concept. One tool health plans could use for evaluating cancer drugs to establish a price has been developed by the Center for Health Policy and Outcomes at Memorial Sloan Kettering Cancer Center, in New York.

Called the "DrugAbacus," the tool creates a price for cancer drugs based on how many years of additional life they provide, the severity of their side effects, the rarity of the disease and the novelty of their chemistry.

Thursday, September 22, 2016

This document is updated weekly, but why is it important? Healthcare marketers are aggressively pursuing new revenue streams to augment lower reimbursements provided under PPACA. Prescription drugs, particularly specialty, are key drivers in the growth strategies of PBMs, TPAs and MCOs pursuant to health care reform. The costs shared below are what the pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to "reference pricing." Apply this knowledge to hold PBMs accountable and lower plan expenditures for stakeholders.

Thursday, September 15, 2016

This document is updated weekly, but why is it important? Healthcare marketers are aggressively pursuing new revenue streams to augment lower reimbursements provided under PPACA. Prescription drugs, particularly specialty, are key drivers in the growth strategies of PBMs, TPAs and MCOs pursuant to health care reform. The costs shared below are what the pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to "reference pricing." Apply this knowledge to hold PBMs accountable and lower plan expenditures for stakeholders.

Tuesday, September 13, 2016

Having spent all of my post-graduate years (15) in the pharmaceutical industry, I've come to know two immutable pharmacy benefit management principles and they are:1) You get what you exactly measure [payer-side]2) The things that you measure, costs and outcomes, will get gamed Analytics may help ease the pain but don't alone solve the problem which is excessive overpayments. Furthermore, analytics can worsen the problem because purchasers rely too heavily on it. In other words, don't rely solely on analytic software programs and all the neat reports they spit out especially if what's being measured is inherently flawed (i.e. AWP and MAC).Eliminating overpayments is done two ways:➤ Sophisticated purchasers, of PBM services, with super strong negotiating skills lead the procurement of services.

➤ Enter into a fiduciary or foolproof PBM Services Agreement. A business process is still required to systematically measure performance throughout the contract term.

Here is a screenshot of just some of the language in a fiduciary contract.

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Douglas Adams wrote in Mostly Harmless, "a common mistake that people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools." I'm reminded of this each time I read something about the Anthem, Express Scripts dispute or Wells Fargo.

Thursday, September 8, 2016

This document is updated weekly, but why is it important? Healthcare marketers are aggressively pursuing new revenue streams to augment lower reimbursements provided under PPACA. Prescription drugs, particularly specialty, are key drivers in the growth strategies of PBMs, TPAs and MCOs pursuant to health care reform. The costs shared below are what the pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to "reference pricing." Apply this knowledge to hold PBMs accountable and lower plan expenditures for stakeholders.

Tuesday, September 6, 2016

This is an awesome podcast and you can feel the tension between the manufacturer (Pfizer) and PBM (Express Scripts). Unfortunately, none of the speakers took the bait. Grab a cup of coffee or your favorite beverage and listen to the entire hour. It's nice to be able to fill in some of the holes when dealing with a complicated issue. So, I strongly recommend you read these two blog posts before listening to the podcast.

Keep this point in mind. While Dr. Miller stresses transparency to clients, he failed to define transparency. There is no standard industry definition for transparency thus each PBM approaches it very differently. I'd like to offer a standard industry definition for transparency.

Transparency - the perpetual elimination of all hidden [PBM] cash flows and full disclosure of service revenues, including their sources, on a plan-specific basis.

Friday, September 2, 2016

This document is updated weekly, but why is it important? Healthcare marketers are aggressively pursuing new revenue streams to augment lower reimbursements provided under PPACA. Prescription drugs, particularly specialty, are key drivers in the growth strategies of PBMs, TPAs and MCOs pursuant to health care reform. The costs shared below are what the pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to "reference pricing." Apply this knowledge to hold PBMs accountable and lower plan expenditures for stakeholders.

Thursday, September 1, 2016

Any program that puts more greenbacks in patients' pockets in this post-recession economy has to be viewed as a good one, right? Alas, it depends on the person you ask.

Devised to shoulder some of the cost burden of prescription drugs, manufacturer co-pay card programs have been tied to improved adherence rates and reduced barriers to the discounted medications. At the same time, payers — insurers and PBMs alike — are crying foul.While some industry veterans sing the praises of co-pay assistance programs, others are eager for a more evenhanded and efficient solution that will achieve the same degree of cost savings. In fact, the co-pay card appears to be stirring the controversy pot more than ever. Indeed, the question seems to have become: What will make it boil over?UNHAPPY PAYERS

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But after more than a decade as an industry staple, the instant-rebate tactic has come under fire. Andrew Miller, VP of operations at pharmacy benefits manager MeridianRx, has grown increasingly concerned with the damaging effects of co-pay cards on payers. Consider insured patients who have been prescribed AbbVie's Humira for their rheumatoid arthritis at $4,000 per month. After insurance and co-insurance kick in, they're on the hook for $1,000 a month. But wait — the manufacturer just happens to have a co-pay coupon, which reduces the cost to zero.What's the problem, you ask? The insurer and the PBM didn't get the memo. After six months of taking and paying for the medication, the PBM's records show the patient paying $6,000 and capping out his out-of-pocket maximum — when, in fact, the patient has paid nothing — the drug company picked up the tab. “There needs to be collaboration to flag that a co-pay coupon has been used,” Miller stresses.-------------------------Tyrone's comment:In the interest of full disclosure I know Andrew personally so my comments will not come as a shock to him. My position is that co-pay cards are a good thing for patients and plan sponsors but not so much for non-fiduciary PBMs. Here's a quick story.